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Keppel Corporation Limited’s Latest Earnings: Some Quick Highlights

Yesterday, Keppel Corporation Limited (SGX: BN4) posted its second quarter earnings for 2017. The reporting period was from 1 April 2017 to 30 June 2017.

Here are some highlights from the latest earnings announcement:

Source: Keppel Corporation’s Earnings Presentation

Revenue for the latest quarter was at S$1.55 billion, a drop of 4% as compared to S$1.63 billion seen a year ago. The group attributed the poorer showing to lower revenues from Offshore & Marine which were partially offset by higher revenues from the other three divisions – Property, Infrastructure, and Investments.

Source: Keppel Corporation’s Earnings Presentation

Net profit declined 21% year-on-year to S$161 million mainly due to lower contributions from the Offshore & Marine and Infrastructure divisions.

Source: Keppel Corporation’s Earnings Presentation

For the first half of 2017, revenue dipped 17% year-on-year to S$2.80 billion, but net profit increased 1% to S$421 million, buoyed by improvements in all segments except Offshore & Marine. Keppel said this demonstrates “our resilience as a multi-business company”.

As at 30 June 2017, Keppel’s balance sheet weakened. It had a net gearing of 0.58 times as compared to 0.56 times, as at the end of 2016.

Free cash flow improved for the first half of 2017 – an inflow of S$237 million as compared to an outflow of S$262 million a year ago. This was mainly due to lower working capital requirements from Offshore & Marine and Property divisions.

Keppel declared an interim dividend of 8.0 cents per share, unchanged from the first half of last year.

The firm said the following about its outlook on the underperforming Offshore & Marine segment:

“The Offshore & Marine Division’s net order book, excluding the Sete rigs, stands at $3.4 billion. Faced with the global sector downturn, the Division has been rightsizing its operations for what is expected to be an extended slowdown. The Division will continue to focus on delivering its projects well, exploring new markets and opportunities, investing prudently in R&D and building new capabilities to position itself for the upturn. The Division is also actively capturing opportunities in production assets, specialised vessels and the growing gas market and exploring ways to re-purpose its technology in the offshore industry for other uses.”

It ended off by saying:

“The Group will continue to execute its multi-business strategy, capturing value by harnessing its core strengths and growing collaboration across divisions to unleash potential synergies, while being agile and investing in the future.”

Keppel Corporation closed at S$6.53 on Thursday. It is currently going at 15 times its historical earnings and yields around 3%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.